For Toni Sacconaghi, A stands for Apple and Ambivalence

"The upshot is that we believe consensus estimates are too high for FY 23, though we struggle in gaining conviction on the magnitude and exact timing of shortfalls."

From a note to Bernstein clients that landed on my desktop Tuesday:

Modeling AAPL's FY Q1 and 2023 estimates is trickier than usual due to a number of factors: (1) Production delays in China (how big? any pushouts?); (2) a 14 week quarter in FY Q1 distorting seasonality; (3) A sudden weakening of the US $ (which should add $12B to FY 23 reported revenues vs. 90 days ago); (4) Gross margins, given a seeming mix shift to iPhone Pro; and (5) Overall demand amid an uncertain economic backdrop.

All that said, our fundamental call is that we believe that demand for iPhones will decline this FY (to ~220M units) - following two strong years - and that Macs and iPads may have been Covid beneficiaries. The upshot is that we believe consensus estimates are too high for FY 23, though we struggle in gaining conviction on the magnitude and exact timing of shortfalls given the aforementioned considerations.

We have tweaked our estimates for FY 23 (across quarters) but remain slightly above consensus for Q1 but below for the full year...

We are ambivalent on the stock and ultimately see risk-reward on AAPL as neutral to slightly negative. On one hand, we worry that (1) Apple was a Covid beneficiary, with lower growth likely over the next few years; (2) that 2023 numbers are too high and need to be revised down; and (3) that AAPL's valuation appears full. On the other, amid low expectations, the setup is potentially favorable and Apple may have permanently re-rated.

Maintains Market-Perform rating and $125 price target.

My take: Struggling to gain conviction. That's our Toni.


  1. Tommo_UK said:
    He went all in at the top and is all out at the bottom. Great timing Toni, as ever. Thanks for the winning contrarian indicators.
    At least he’s off the bus now – it’ll be safe to get back on soon.
    If he’s struggling as he dated someone point him in the direction of TA (Traders Anonymous) where he’ll get the help and support he desperately needs, trend-lines and support/resistance levels l for his state of mind to overcome included. He’ll be on a 12 step programme in no time.

    January 24, 2023
  2. Gregg Thurman said:
    “ Apple may have permanently re-rated.”

    How many times have we heard this? Sever heard and commented on so many times that there is nothing original left to say.

    January 24, 2023
  3. Greg Lippert said:
    I said it a few weeks ago when he revised down (after Apple basically bottomed out) – now is the time to buy. Toni gave us the sign.

    Since then Apple has mostly gone one way – up. I think we just got another all clear sign from CNBC’s greatest Apple expert.

    Thanks Toni!

    January 25, 2023
  4. Rodney Avilla said:
    Toni S, I believe, is setting himself up for a repeat of his past performances, consisting of a miss (sorry folks, I missed that), followed by a tough compare for the following year (2024 can’t be as good as 2023, for all the same reasons that 2023 was not supposed to be so good.
    I don’t believe he is a contrarian; he just puts different weights on the factors affecting aapl, than the wise & seasoned folks on PED 3.0. But he’s learning. I think.

    January 25, 2023
  5. Kirk DeBernardi said:
    “My take: Struggling to gain conviction. That’s our Toni.”

    More like struggling to get a grip.

    January 26, 2023

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